Appeal from United States District Court for the Southern District of Iowa - Des Moines

Before COLLOTON, GRUENDER, and BENTON, Circuit Judges.

COLLOTON, Circuit Judge.

Teamsters Local Unions 727-S and 77-P ("the Unions") appeal from the district court's order vacating an arbitrator's award of severance pay. Because the arbitrator was at least arguably construing or applying the collective bargaining agreement, a federal court must defer to the arbitrator's interpretation, and we therefore reverse.

I.

In 2009, Rio Tinto PLC agreed to sell to Bemis Company, Inc., three packaging plants operated by Rio Tinto's subsidiary, Alcan Packaging Company. The sale closed on March 1, 2010. The Unions represent the workers at the plants and were parties to a collective bargaining agreement with Alcan. After the sale was announced, Bemis informed the Unions that it would not adopt the terms of the agreement. Bemis and the Unions entered into negotiations. Bemis eventually hired all of the Alcan workers who applied to work for Bemis, though under less favorable terms of employment than the workers had enjoyed under their agreement with Alcan.

After the sale closed, the Unions filed a grievance against Alcan, claiming that Alcan violated the agreement. As relevant to this appeal, the Unions claimed that eligible workers at the three plants were entitled to severance pay. Alcan denied the grievance, and the agreement required the parties to submit the dispute to an arbitrator.

The relevant portion of the agreement, Appendix D, provides: "If the Company shall close a plant completely and permanently, employees whose employment shall be terminated as a result thereof and [who are eligible] shall be entitled to a Severance . . . ." Because the Unions and Bemis successfully completed their negotiations before the sale closed, there was a seamless transition on the day that Bemis took over, and operations at the plants never ceased. Alcan argued to the arbitrator, therefore, that it never closed the plants, so severance pay was not due under Appendix D. The Unions maintained that Alcan completely and permanently closed the plants—as far as the company was concerned—by selling them to Bemis, even though business at the plants continued uninterrupted following the sale.

The arbitrator ruled for the Unions. Alcan then filed this action in the district court, seeking to vacate the arbitrator's award of severance pay. The district court granted Alcan's motion, concluding that the arbitrator's award of severance pay could not be reconciled with the plain meaning of Appendix D. The Unions appeal, and we review the district court's decision to vacate the arbitrator's award de novo. Ace Elec. Contractors, Inc. v. Int'l Bhd. of Elec. Workers, Local Union No. 292, 414 F.3d 896, 899 (8th Cir. 2005).

II.

Alcan's action to vacate the arbitrator's award arises under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185. Section 301 confers jurisdiction on federal courts over cases involving a breach of a collective bargaining agreement, id., and it authorizes federal courts to fashion the substantive law that governs such labor disputes. Textile Workers Union of Am. v. Lincoln Mills of Ala., 353 U.S. 448, 456-57 (1957). Except in limited circumstances, that body of law requires a court to defer to the arbitrator's interpretation. See United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38 (1987).

When Alcan and the Unions contracted to resolve their disputes via arbitration, they agreed to be bound by the arbitrator's interpretation of the agreement. We may not vacate an award merely because our construction of the agreement differs from the arbitrator's. United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 599 (1960). If the arbitrator was "even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision." Misco, 484 U.S. at 38 (emphasis added). Only when an arbitrator issues an award that does not "draw its essence from the contract, " because it reflects instead the arbitrator's "own notions of industrial justice, " may a court vacate an arbitrator's decision. Id.

Alcan suggests that the Federal Arbitration Act, 9 U.S.C. &sect; 10(a)(4), may provide for more vigorous judicial review than does &sect; 301. If the Act applies, then &sect; 10(a)(4) does not prescribe a different standard of review. The Supreme Court's most recent case applying &sect; 10(a)(4) recited the &sect; 301 standard and cited authorities arising under the latter statute. See Oxford Health Plans LLC v. Sutter, 133 S.Ct. 2064, 2068 (2013) (citing E. Associated Coal Corp. v. United Mine Workers of Am., 531 U.S. 57, 62 (2000), Misco, 484 U.S. at 38, and Enter. Wheel & Car Corp., 363 U.S. at 599). If there were a conflict between the statutes, moreover, we would apply § 301, because it is a specific directive to create the substantive law that governs collective bargaining agreements, and the specific governs ...

Our website includes the first part of the main text of the court's opinion.
To read the entire case, you must purchase the decision for download. With purchase,
you also receive any available docket numbers, case citations or footnotes, dissents
and concurrences that accompany the decision.
Docket numbers and/or citations allow you to research a case further or to use a case in a
legal proceeding. Footnotes (if any) include details of the court's decision. If the document contains a simple affirmation or denial without discussion,
there may not be additional text.

Buy This Entire Record For
$7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.